Shared ownership, has anyone done this?

[LittleMissPeggySue]

First time poster on this board, I'm looking for some positive/ negative stories about shared ownership. I'm looking to sell the house I bought with ExDh 17 years ago, we've agreed we'd split the profit 50/50 after the outstanding mortgage, estate agent and solicitors selling fees have been paid. Our house is in a desirable area (they generally go quite quick here) and is worth now a lot more than what we bought it for. However, I'm buying my next house on my income only, and although id have a big deposit, it's barely enough to get a decent 2 bed terrace. Any I do see seem to be snapped up the minute they go on Rightmove. So my question is whether anybody here has used the shared ownership part buy/part rent option, in similar circumstances and it went well or horribly. I think I would qualify in terms of the income criteria although I'm not sure if the fact I already have a mortgage might rule me out. Grateful for any stories in terms of whether it's worth pursuing.

think of shared ownership as being like a long term rental. you are paying rent but the landlord can't chunk you out.

different shared ownership schemes have v different rules for who can get it, whether you can increase your share, how you sell the flat one day etc. so look up the options where you want to be & find out their rules before you can decide.

I bought one since I knew I wouldnt be in it long, it was way cheaper than anything equivalent (one bed end of terrace house with big garden vs 1 bed flat on open market, about £400 cheaper a month than the rent on something similar). It was brand new, well done up with lovely fitted kitchen etc and I've loved living in it. It is built next to some flats I think are council, (only about 10 flats but still), can be a bit rough. Me and my beighbour are in similar positions, both living alone, both making a lot more than the median income but you can have up to 80k household income when you buy so we both still qualified.

Only annoying thing is I didn't make any profit selling it! If it had been owned outright i probably would have made 30-40k over covid. Sold first day I put it on the market, shows how few things there are round here like this. Mine does let me buy up to 100% and also then buy the freehold though so better than some I've seen.

I had a shared ownership flat in London. I owned 25%. At first, mortgage/rent/service charge were a couple of hundred cheaper than private rent, but each year the rent/service charge went up until we were paying around £200 over private rent. We were there for about six years.

I didn't staircase so never owned more. I sold and made around £60k equity. Just bear in mind, though, that some shared ownership schemes have rules about how you sell. With mine, we had to give them six months to sell it first, and after that we could engage an estate agent. Two or three people saw it and fortunately one of those bought it. The buyer had to pass all the shared ownership checks, too, so there was always the worry that they wouldn't pass and then we'd have to wait longer to find someone who wanted it and passed all the checks and criteria.

It was really quite painless, though, although I appreciate not everyone has such a good story.

Yes we had one. Buying was straightforward , we then staircased to 100% (so no longer paid rent to the housing association). It was the only way we could afford to buy.
Drawbacks were - management company, freeholder fees, rising service charge, and big delays when we came to sell - my solicitor had a nightmare getting certain documents from the management company and they charged huge amounts to do anything. But overall, it was good for us.

It sounds like it’s good as a last resort but if you can afford to buy a decent 2 bed terraced property without it, that would be preferable in my opinion. The problem with shared ownership is that you will have to pay all the maintenance costs despite only owning part of the property and if the property appreciates in value you only gain part of that.

I was in a similar situation to you and so was a friend, we both chose different options.

Option 1 - Me
Used the deposit to buy a house on a nice road in a cheaper area. Mortgage is manageable at around £400 per month. Repayment mortgage so will eventually own the property which will support retirement. Able to save, have a reasonable standard of living etc.

Option 2 - Friend
Used deposit and purchased a shared property. Property is in a lovely area. New build, so looks lovely. Mortgages are similar around £400 per month, but they also have to pay the rent section which I believe is similar to the mortgage. This has meant they have struggled to save. Life gets in the way and although on paper looks like you can afford the mortgage/rent, with no savings unexpected bills go onto credit card. My friend is permanently in overdraft.

My advice would be look very carefully at how much the mortgage and rent costs together compared to income. Is it going to be affordable long term to pay both.

It also depends on the market where you live. My first property was a shared ownership new build flat. It was less than a mile from a mainline station which was 25 minutes to a main London terminal so prime commuter area. I also had to give them six months to sell it, we did one open morning and got six offers. The price is set so there's no bidding war situation and they chose the person who fit the criteria best, local connections and a keyworker (same way I got it). I owned half so got half the profit made which was very good, not sure how PP wasn't given any of the profit. It suited me as a single buyer in a frontline keyworker role at the time so not amazingly paid and on the outskirts of London. It meant I got into the property ladder at 25 with no parental help which is very very difficult in this area. The rent, service charge and mortgage combined cost me less than private rental in the same area but it is an expensive one. It was amazing for me and meant I had a very healthy deposit for my first house, I'd also been promoted in that time and now DH had moved in so we had bigger mortgage potential too. Downside it took nearly nine months because the HA who owned the other half and their solicitor were exceptionally slow and needed chasing relentlessly. We had a solicitor who specialised in shared ownership and she was amazing.
A friend's younger sister did it in a part of the North East where there is plentiful cheap housing, she paid a premium for new build and five years later it was valued at less than she paid and there was little interest in shared ownership because private rental and full ownership in the area aren't expensive by comparison. She struggled to sell it and ended up with a financial loss.

You own a percentage of the house but are responsible for 100% of the maintenance costs. Doesn't sit right with me

Did you get the shared ownership property in the end? I'm in exactly the same situation as you following a break up. Big deposit but lowish income. I'm struggling to get a 1 bedroom flat with a normal mortgage - that'll be tricky trying to squash me and 2 kids in!